A second man has been arrested by police investigating fraud allegations concerning firms given funding by London's City Hall.

The 45-year-old surrendered himself at Belgravia police station. Earlier a man aged 61 was arrested, with both men held on suspicion of money laundering.

The Metropolitan Police (Met) said it had also searched homes in Harrow, Croydon, Tottenham and Leytonstone.

A Met spokesperson said the 61-year-old has been bailed until Thursday.

Police are investigating allegations of fraud in connection with six organisations which received funding from Ken Livingstone's office.

It follows allegations about money paid by the London Development Agency (LDA), City Hall's business arm, to a number of black organisations.

If people have stolen from the LDA then we would want them to go to jail

London Mayor Ken Livingstone

The Met spokesperson said: "A 45-year-old man voluntarily attended Belgravia police station this afternoon where he was arrested on suspicion of money laundering."

The man remains in custody.

BBC London's Political Editor Tim Donovan said the police action concerns the Green Badge Taxi School based in south London which received about £170,000 from the LDA to train ethnic minority cab drivers.

He added he expects more arrests as the inquiry develops.

London Mayor Ken Livingstone said following Tuesday's police operation: "If people have stolen from the LDA then we would want them to go to jail."